The festive season in India kicked off in the second half of 2023 on Rakshabandhan, which will be followed by other festivals like Ganesh Chaturthi, Navratri, Dussehra and Diwali and is likely to continue till Christmas and New Year. This is the time when Indians flock to jewellery stores as a tradition, bringing cheer and much-needed business to the sector.
The jewellery sector contributes to around 7 percent of the country's GDP.
In an interview with CNBC TV-18, Vipul Shah, Chairman of the Gem and Jewellery Export Promotion Council, (GJEPC) spoke about the 2023 outlook for the jewellery sector.
Shah said that the first half of 2023 was pretty slow for the sector. "But after IIJS (India international jewellery show) concluded, we are now seeing a huge growth and demand into the plain and studded gold segment," he said.
India International Jewellery Show (IIJS) is India's largest B2B gems and jewellery exhibition organised by the GJEPC. It had 2,100 international exhibitors from 65 countries. "A lot of orders were placed for Diwali in IIJS," Shah added.
Speaking of studded gold, he said, it (demand) is a little bit slow because of rising interest. "Consumers are still getting adjusted to the new prices as such but I feel from now to December our export should start picking up on the back of good demand," he further added.
An imbalance in demand and supply impacts prices too, Shah said.
He said that as Russia's diamond supplies were curbed after the Russia-Ukraine conflict, the weak demand weighed on the prices of raw and finished diamonds. For India it is all about the second half of the year where gradually the export numbers would start to go up and the prices would stabilize too, he added.
Natural vs lab-grown diamonds
"Both segments are going to exist and will complement each other," Shah said. Lab-grown diamonds are currently catering to the affordable class.
New Markets to Tap in?
GJPEC is seeing a slowdown in the US and China markets, he said. However, the council is looking to expand their reach in countries like Vietnam and Cambodia. "There is a huge potential in South Asian countries as they have good GDP, economy," he said.
Speaking on the expectations for the sector from the coming Budget he said that the industry demands have already been put in front of the government. "I am hopeful it'll be considered. Relaxation on taxes is one of the demands, and I am hopeful the government will be working on these," he said.
In an interview with CNBC TV-18, Asher Ottamoochikkal, Managing Director- Indian operations at Malabar Gold & Diamonds also spoke about the 2023 Jewellery outlook, store expansions and more.
"We expect a better second half this year because of Diwali and other festivals coming," he said.
Annually, the company is seeing 20-25 percent growth. Globally there are 326 stores of which India has 185 stores. "Eight stores were opened in his financial year (FY) and we will be opening 40 more stores this FY in India," he added.
The company is estimated to cross 500 stores by 2026, Asher said.
"Internationally, we are expanding in existing countries and also adding more countries like we added UK, Bangladesh and Australia this year. Some cities in Egypt and Africa are (also) in the works," he said.
One Country: One Price formula
Malabar Gold is the first to start - One Country: One Price formula and other brands have followed this.
Speaking on the same, he said that this formula helped the company a lot. "One price across the country would be beneficial as it'll give more confidence to the customers," he said.
A factor that could hamper the boost
India witnessed the driest August since 1901, as it recorded a 35 percent deficient rainfall. A weaker monsoon indicates weaker crops and this factor could impact the jewellery sector due to subdued rural demand.